Research on the Impact of FinTech Development on Urban Innovation in China: An Empirical Analysis Based on 282 Cities

Financial Technology (FinTech) has disrupted the traditional financial sector, offering robust technical support to the financial services industry and fostering new financial service models. But can it effectively address the financing challenges of the real economy and, in turn, stimulate urban innovation? This paper conducts an empirical analysis based on panel data from 282 Chinese cities between 2007 and 2020, exploring FinTech’s influence on urban innovation. Our empirical analysis reveals three key findings. First, FinTech significantly promotes urban innovation; specifically, a 1% increase in the FinTech index is associated with a 4.947% increase in urban innovation. Second, this impact exhibits significant heterogeneity, proving most potent in eastern, coastal, and densely populated cities, which underscores the importance of market maturity and economic openness. Notably, the effect is also more pronounced in resource-based cities, highlighting FinTech’s critical role in driving economic transformation and industrial upgrading. Third, the relationship is nonlinear, featuring a double-threshold effect: FinTech’s proinnovation influence becomes significant only after a certain development level (threshold: 4.890) and accelerates substantially after a higher threshold (5.727) is surpassed, indicating increasing marginal returns. Consequently, it is recommended that China expedite FinTech development, enhance information exchange channels, ease financing constraints for innovative entities, and make FinTech more accessible and efficient in driving urban innovation.